Future  of  Copper  and  the 
Gold  -\ge 

By 

John  J.  Gushing 


UNIVERSITY  OF  CALIFORNIA 
AT   LOS  ANGELES 


GIFT  OF 

CLARK   OBSERVATORY 


The 

Future  of  Copper 

and 

The  Gold  Age 


By  John  J.  Cashing,  Mining  Attorney 

Member  National  Geographic  Society,  &c. 


Copyrighted  1907 


Price,  25  Cents 


THE  FUTURE  OF  COPPER 

AND  THE 

GOLD  AGE. 

BY  JOHN  J.  GUSHING 

Mining  Attorney,  Member  National  Geographic  Society,  Etc. 

INTRODUCTION. 

Of  Interest  to  Copper  Shareholders. 

$  The  thousands  upon  thousands  of  investors  in  copper  shares 
^will  be  interested  in  any  information  which  will  tend  to  give 
them  light  or  hope  on  the  future  of  Copper.  Charlatans, 
2:  fakirs  and  promoters  have  been  urging  the  public  to  buy 
copper  shares  for  the  past  five  years.  Some  of  the  most  en- 
thusiastic, but  I  cannot  add  the  most  reputable,  would  be  ad- 
visors have  heralded  the  cry  "withdraw  all  your  savings  from 
the  banks  and  buy  copper  shares"  until  this  has  become  a 
household  cry.  Many  deluded  and  over-credulous  persons  of 
moderate  means  have  followed  the  advice  of  the  pernicious 
advisors,  until  the  savings  of  thousands  upon  thousands  of 
honest  and  confiding  persons  are  tied  up  in  declining  or 
worthless  copper  shares.  Casual  analysis  of  the  advice  given 
to  the  public  by  some  of  the  self  constituted  investment  advis- 
ors should  have  convinced  any  reasoning  being  of  the  un- 
soundness  of  the  advice.  If  all  the  dire  financial  disaster 
predicted  in  the  same  public  statements  advising  the  purchase 
of  copper  shares  was  to  be  realized  then  as  a  matter  of  course, 
copper  shares  would  be  among  the  first  to  suffer,  and  events 
have  proven  this  was  the  case.  The  value  of  all  copper  shares-- 
assuming  of  course  that  they  are  of  a  productive  property,  or 
one  susceptible  of  production  and  which  are  the  only  ones 
I  refer  to,  must  depend  entirely  upon  the  market  price  of  the 
copper  metal.  The  market  price  of  copper  depends  upon, 
cost  of  production,  supply,  demand,  and  ability  to  purchase 

241425 


A  period  of  industrial  stagnation,  curtailing  the  demand;  a 
period  of  excess  production  over  demand,  or  of  depressing 
financial  conditions  cutting  off  the  supply  of  monev  to  carry 
out  contemplated  and  needed  improvements,  the  price  of 
copper  must  decline.  The  decline  of  one  cent  a  pound  iii  the 
price  of  copper  may  reduce  the  dividends  upon  copper  shares 
one  or  two  per  cent,  or  cut  them  off  entirely,  therefore  it  is 
very  essential  that  all  who  contemplate  investing  in  copper 
shares  should  carefully  look  into  every  phase  of  the  copper 
situation  as  to  its  general  conditions,  past  and  future,  and 
also  as  to  the  special  conditions  surrounding  the  particular 
proposition  under  consideration.  The  production  of  copper 
is  practically  a  manufacturing  proposition ;  the  converting  of 
raw  material  into  a  finished,  useful  and  marketable  product : 
and  substantially  the  same  conditions  apply  to  it  as  to  any 
legitimate  manufacturing  business,  viz : 

1.  The  convenience  of  supply  and  cheapness  of  cost  of  the 
raw  material ; 

2.  The  convenience  and  cost  of  transportation  and  power, 
and  cost  of  labor; 

3.  A  constant  and  stable  market  not  influenced  by  manipu- 
lation or  subject  to  spasmodic  and  dangerous  fluctuations,  but 
controlled  by  legitimate  trade  demands. 

The  raw  material  for  copper  comprises,  the  cupriferous 
ores,  and  these  are  found  in  profitable  or  non-profitable  quan- 
tities in  nearly  all  mineral  localities  of  the  world.  The  cost 
of  the  same  may  be  said  to  be  based  largely  upon  the  percent- 
age of  copper  contained  in  the  ores  and  the  character,  as  to 
convenience  and  cheapness  in  treatment.  A  high  percentage 
ore  of  one  character,  may  be  more  expensive  to  the  miner 
than  one  of  a  lower  percentage  with  less  cost  of  extraction ; 
hence  the  copper  producer  possessing  the  most  favorable  con- 
ditions, can,  like  the  manufacturer  of  any  class  of  goods,  pro- 
duce at  a  lower  cost  than  one  not  so  favorably  situated,  and, 
therefore,  if  desired,  can  undersell  his  competitor.  But  the 
manufacturer  who  can  produce  at  the  lowest  <~-o*t  is  always 
ready  to  sell  at  the  highest  price  obtainable,  therefore  when 
the  demand  is  in  excess  of  the  immediate  facilities  to  supply 
there  are  always  consumers  who.  to  secure  quick  delivery, 
are  willing  to  bid  up  the  price.  Hence  active  or  urgent  de- 
mand is  one  of  the  chief  factors  in  maintaining  high  prices. 


The  information  on  the  copper  situation  and  the  relation 
of  Gold  thereto  was  compiled  by  me  some  time  ago  when  the 
metal  was  selling  around  25e  a  pound,  at  the  suggestion  of 
several  clients  who  expressed  a  desire  that  I  should  furnish 
them  my  views  upon  the  future  of  copper.  It  was  not  in- 
tended for  publication,  but  several  of  the  statements  having 
subsequently  been  so  nearly  verified  in  fact,  and  some  of  the 
interested  persons  having  expressed  the  belief  that  the  publi- 
cation of  the  same  would  prove  of  interest  and  value  to  thous- 
ands of  investors,  I  have  consented  to  the  publication  of  the 
article  and  have  added  to  the  original  such  further  points  and 
suggestions  as  might  prove  useful  to  present  or  future  inves- 
tors in  either  copper  or  gold  shares.  If  this  little  booklet 
shall  be  the  means  of  aiding  investors  in  mines  or  shares  of 
mining  companies  in  making  wiser  and  more  discreet  invest- 
ments, or  of  directing  those  who  have  already  been  swindled 
in  investments  to  a  means  whereby  they  might  recover  their 
money,  I  shall  feel  well  repaid.  THE  AUTHOE. 

New  York,  October,  1907. 


FOREWOED. 

In  October,  1906,  when  copper  was  selling  above  25e  a 
pound,  and  the  demand  for  it  at  almost  any  price  seemed  to 
be  insatiable,  I  stated  to  some  friends  who  were  interested  in 
copper  shares,  that  I  could  see  a  sharp  and  pronounced  de- 
cline in  the  value  of  copper  shares  coming  in  the  near  future 
for  the  reason  that  in  my  opinion  the  copper  metal  would  be 
selling  at  12c  a  pound  within  a  year  and  this  could  not  help 
but  bring  lower  prices  for  copper  shares.  I  was  asked  to  give 
my  reasons  for  this  belief  and  the  information  herein  con- 
tained embraces  the  substance  of  my  reply.  The  prediction 
of  12c  copper  was  not  fully  verified  within  the  year  but  so 
surprisingly  close  as  to  substantially  confirm  the  prediction. 
It  now  looks  as  though  lOc  copper  would  be  pressing  for  a 
market  within  the  next  year,  although  temporary  advances 
are  likely,  and  the  holders  of  copper  shares  can  appreciate, 
what  that  means  to  them ;  but  a  brighter  golden  day  will  fol- 
low the  depression  in  copper  and  the  future  is  full  of  hope 
and  encouragement  for  the  holders  of  copper  shares. 


Before  going  into  the  reasons  I  wish  to  state  that  this  book- 
let is  not  published  at  the  instance  of  any  investment  inter- 
ests, either  c'opper  mines,  copper  shares,  gold  shares  or  indus- 
trial shares,  but  solely  with  a  view  of  calling  attention  to 
certain  features  of  the  metal  and  money  situation,  also  of 
investment  in  mining  shares  generally,  which  may  prove  in- 
teresting and  useful  to  those  who  will  read  it  carefully  and 
profit  by  it. 


THE  FUTURE  OF  COPPER 

STATISTICAL. 

The  demand  for  copper  has  increased  normally  with  popu- 
lation and  trade,  like  all  other  products,  but  during  the  past 
twenty  years  the  demand  for  copper  has  increased  abnor- 
mally and  rapidly  from  year  to  year  owing  to  the  increased 
use  and  distribution  of  electricity  for  power,  lighting,  tele- 
phones and  otherwise. 

The  Electric  Age  is  still  in  its  infancy,  hence  the  demand 
for  copper  must  continue  to  increase  in  much  greater  ratio 
than  heretofore.  It  is  a  well  known  fact,  however,  that  de^ 
mand  without  an  ability  on  the  part  of  consumers  to  pur- 
chase would  soon  leave  the  producers  a  surplus  supply  and 
prices  would  remain  stationary  or  decline  depending  upon 
the  anxiety  of  the  producers  to  market  their  product. 

For  the  information  of  those  who  may  not  have  access  to 
copper  statistics  I  am  quoting  hereafter  figures  relating  to 
copper  production  and  prices  of  copper  based  upon  statistics 
contained  in  "Stevens'  Hand  Book  of  Copper"  and  other 
authorties  on  the  subject. 

The  world's  average  annual  production  of  copper  and  the 
average  annual  London  price  for  ten  years  periods  is  given 
as  follows:  (Price  refers  to  English  £  (pounds)  per  ton.) 
1801-1810  9,100  Tons  £160 

1811-1820  9,600      "  130 

1821-1830  13,500      «  101 

1831-1840  21,840      "  94 

1841-1850  29,100      "  83 

1851-1860  50,699      "  111 

1861-1870  90,000     "  87 

1871-1880  118,900      "  79 

1881-1890  237,339      "  60 

1891-1900  370,890      "  52 

From  this  table  it  will  be  seen  that  there  was  a  gradual 
increase  in  production  up  to  the  period  beginning  with  1881, 
in  which  decade  the  average  annual  production  was  double 
that  of  the  preceding  decade.  This  was  a  forerunner  of  the 


beginning  of  the  electrical  age.  The  decline  in  price  kept 
regular  pace  with  the  increased  production  until  1851-1860 
when  an  unusual  demand  established  a  new  high  price  level 
from  which  there  followed  another  series  of  regular  declines. 
Coming  down  to  the  years  following,  note  the  effect  of  in- 
creased electrical  use  on  the  production  of  copper  and  how 
readily  the  mines  responded  to  the  demands. 

Year.  Tons.  Price. 

1901  513,243  1C).  72  e 

1902  542,167  12.16  " 

1903  585,081  13.72  « 

1904  641,697  15.89  " 

For  comparison  with  London  prices  it  may  be  mentioned 
that  lie  copper  would  practically  mean  51.1  London  quota- 
tion; 13c  equivalent  to  61.1;  16c  equal  to  about  74.1;  18c  to 
about  84.1.  Taking  a  period  of  25  years  from  1880  the  dawn 
of  the  Electrical  Age  to  1904  the  total  copper  production  of 
the  world  is  given  as  follows : 

United  States  3,936.560  Tons. 

Foreign  4,425,500      " 


Total  8,362,060      "  . 

or  an  average  annual  production  of  334,482  tons;  but  as 
appears  from  the  first  table  the  average  between  1881-1890 
was  only  237,339  it  shows  how  rapid  was  the  increase  after 
1890.  In  1880  the  proportions  of  copper  produced  in  the 
United  States  was  only  17%  of  the  whole;  in  1890  it  had 
risen  to  43%  and  in  1900  to  57%  showing  the  tremendous 
copper  resources  of  the  United  States  whenever  price  and 
demand  induced  development. 

Taking  now  four  periods  for  comparison  on  the  question 
of  consumption  and  showing  the  excess  of  exports  over  im- 
ports, it  shows  the  marvelous  growth  of  the  copper  industry 
in  the  United  States  in  a  short  period  and  that  the  real 
demand  for  copper  did  not  begin  here  until  about  1904,  when 
our  imports  increased  and  our  excess  of  exports  decreased. 
Year.  Imports.  Exports.  Excess  of  Exports. 

1890  1,980  Tons.  5,485  Tons.  3,505   Tons. 

1897         14,461      "  138,627     "  124,166      " 

1900         52,588      "  168,986     "  116,398      " 

1904       181,292      "  277,275     "  95,983      « 


In  the  short  space  of  seven  years  our  excess  of  exports 
increased  from  3,505  tons  to  124,166  tons.  Our  American 
production  for  1897  is  shown  to  be  247,039  tons  hence  it 
will  be  seen  that  we  had  not  begun  to  use  copper  at  that 
time  compared  with  European  countries,  as  we  could  then 
spare  practically  50  %  of  our  entire  product.  It  is  evident 
therefore  that  the  Electrical  Age  begun  at  an  earlier  date 
and  was  developed  more  rapidly  in  Europe  than  in  America. 
The  following  figures  will  serve  further  to  illustrate  that 
point :  The  production  of  the  United  States  in  1900  is  given 
as  303,058  tons  while  our  excess  of  exports  was  116,398  tons ; 
in  1904  with  a  production  of  406,268  tons  we  could  only 
spare  95,983  tons.  Therefore  the  real  copper  age  apparently 
begun  in  the  United  States  between  1900  and  1904  and  to 
say  that  it  has  been  concluded  and  the  demand  for  copper 
satisfied  in  a  short  space  of  three  years  is  ridiculous.  The 
fact  is  that  the  real  demand  for  copper  in  this  country  has 
now  only  begun  and  let  the  country  now  supply  to  the  con- 
sumers of  copper  the  money  to  carry  out  their  projected  im- 
provements with  the  same  lavish  hand  that  the  money  was 
supplied  to  develop  and  produce  copper,  production  and  con- 
sumption will  adjust  themselves  and  copper  prices  and  de- 
mand become  more  stable. 


MANIPULATION. 

About  1898  a  French  Syndicate  undertook  to  cornef  the 
copper  market  but  met  with  financial  disaster,  and  brought 
ruin  upon  thousands  of  investors. 

The  real  era  of  copper  manipulation,  however,  began  about 
1900  and  this  marked  the  beginning  of  abnormally  high 
prices,  with  consequent  restriction  of  consumption,  these  high 
prices,  however,  stimulated  the  waning  interest  in  copper 
mines  and  the  search  for  copper  was  taken  up  by  every 
prospector,  miner  or  capitalist,  and  new  mines  were  opened 
up  and  the  productive  capacity  of  old  ones  increased.  High 
prices  always  encourage  substitution  and  discourage  con- 
sumption ;  as  a  sequence  over  production  and  lower  prices 
follow.  This  is  the  natural  law  and  if  only  this  point  were 
to  be  considered,  the  factor  of  difference  between  producer 
and  consumer  would  soon  adjust  itself;  but  you  will  observe 


8 


before  finishing  this  article  there  are  many  other  material 
factors  to  figure  upon  and  only  time,  labor  and  patience  will 
adjust  them. 

DEVELOPMENT. 

It  takes  about  3  to  5  years  to  open  a  large  copper  mine. 
Bearing  in  mind  that  the  Copper  Age  really  begun  in  this 
country  in  1900,  and  that  the  seach  for  copper  mines  really 
started  about  1901,  it  will  be  seen  that  the  competative  pro- 
duction of  new  mines  could  not  begin  to  be  felt  until  between 
1903  and  1906.  An  examination  of  the  real  conditions  will 

confirm  the  above  statement. 

* 

NEW  MINES. 

Prior  to  1901  the  copper  of  the  United  States  was  pro- 
duced principally  in  Michigan  and  Montana.  The  increased 
production  of  Montana  from  1901  to  1904  is  shown  to  be 
only  60,044,389  Ibs.,  that  of  Michigan  42,725,103  Ibs.  While 
the  increase  of  the  other  states  in  the  same  period  was 
89,867,889  Ibs.,  being  considerably  more  than  all  the  other 
states  (except  Arizona)  produced  in  1901.  To  illustrate  the 
stimulating  effect  high  prices  had  on  production,  Alaska, 
which  is  not  credited  with  any  production  in  1901  is  credited 
with  2,043,586  Ibs.,  in  1904. 

It  is  safe  to  assert  that  there  has  been  more  money  ex- 
pended in  opening  up  new  copper  properties  since  1904  than 
for  five  years  previous  thereto  and  that  many  of  these  prop- 
erties have  now  reached  the  productive  stage,  and  therefore 
must  become  active  competitors  at  any  price  which  will 
return  a  profit.  The  cost  of  producing  copper  has  been  esti- 
mated at  from  7c  to  15c  a  pound,  but  I  should  say  that  9c  a 
pound  would  be  the  minimum.  The  newly  opened  mines 
possess  an  advantage  in  the  cost  of  production  on  account  of 
better  grade  of  ores,  cheaper  development  or  more  modern 
equipment,  hence  will  practically  control  the  market  price. 
The  amount  of  new  work  under  way  at  the  beginning  of 
1907  seemed  to  be  greater  than  ever  before,  and  Stevens  in 
his  Hand  Book  says:  "It  is  safe  to  predict  a  steadily  in- 
creased annual  output  for  at  least  five  years  to  come."  This 
statement  has  been  fully  verified  up  to  the  present  time. 
His  estimates  show  practically  a  100^  increase  will  occur 
between  1904  and  1910. 


The  question  is,  can  this  country  absorb  this  increase? 
Of  this  there  can  be  no  doubt,  if  given  other  favorable  condi- 
tions. 

WHAT  IS  THE  FUTURE  OF  COPPER. 

In  view  of  the  foregoing  and  of  the  present  condition  of 
things,  what  is  the  future  of  copper?  It  is  evident  from  the 
foregoing  that  things  look  blue  for  the  holders  of  copper 
shares  at  present  with  prices  declining  and  mines  closing, 
with  a  prospective  increase  in  production  of  100 %  over  the 
present  unprecedented  production,  will  the  world's  markets 
absorb  it? 

Over  production  of  Copper 

not  responsible. 
Under  production  of  Gold 

is  responsible. 

There  is  not  too  much  copper  to  fill  the  demand,  but  too 
little  gold  at  present  to  afford  the  purchasing  power,  and 
until  this  condition  changes  we  must  expect  stagnation  in 
the  copper  consuming  industries  and  other  lines  of  business. 
Bankers  may  tell  you  that  there  is  an  abundance  of  money, 
but  when  you  present  your  checks  for  money,  in  many  in- 
stances, you  are  told  that  there  is  no  money.  The  recent 
trying  experience  of  the  banks  in  New  York  and  also  in  other 
places  serve  to  give  a  practical  and  forcible  demonstration 
of  the  truth  of  the  statement  at  the  beginning  of  this  para- 
graph. All  such  startling  headlines  as  appeared  in  a  single 
issue  of  a  daily  paper  in  New  York  recently  as  the  following 
serve  to  furnish  further  proof  of  my  statement  of  a  year 
ago  along  this  line. 

"Eight  banks  and  Trust  Companies  stop  payment,  declar- 
ing they  are  solvent  but  cannot  secure  money  to  pay  deposi- 
tors." 

"Savings  Banks  will  require  60  days  notice  before  money 
can  be  withdrawn." 

"Big  Trust  Company  in  Providence  closes  its  doors  for 
lack  of  money." 

"Clearing  House  certificates  will  be  issued  to  take  the 
place  of  money." 

"Governor  Sparks,  of  Nevada  has  declared  three  legal 
holidavs  in  succession  to  enable  the  banks  to  secure  monev." 


10 

"Senator  Elkins  of  West  Virginia,  states : 

"The  business  of  the  country  has  increased  30%,  money 
has  increased  only  5%,  leaving  a  gap  of  25%  based  on  credit 
or  confidence.  This  confidence  is  being  shaken  and  we  need 
more  money.  The  next  Congress  should  provide  for  an  in- 
crease of  the  currency.  What  the  country  needs  is  more 
money." 

If  what  Senator  Elkins  states  was  the  only  cause  the  situ- 
ation could  be  readily  relieved  by  international  exchange, 
but  the  same  conditions  of  expanse  in  business  arising  in  all 
parts  of  the  world  at  the  same  time,  not  only  limits  the 
United  States  to  its  own  money  resources  but  aggravates  the 
cause  by  foreign  countries  drawing  upon  our  Gold  supply. 

The  recent  dismissal  of  several  hundred  employees  by  the 
great  Westinghouse  Electric  Manufacturing  Company  of 
Pittsburg,  followed  more  recently  by  application  for  receiv- 
ers for  that  $45,000,000  concern;  coupled  with  a  statement 
that  the  Company  has  more  orders  on  its  books  than  it  can 
fill  on  account  of  inability  to  procure  money  to  execute  its 
orders,  is  further  evidence  of  the  scarcity  of  gold.  The  West- 
inghouse Company  is  said  the  be  the  second  largest  user  of 
copper  in  the  United  States,  and  given  the  money  for  con- 
ducting its  business  on  a  scale  commensurate  with  the  un- 
paralelled  demand  upon  it,  would  soon  enter  the  copper 
market  and  absorb  a  large  portion  of  the  available  surplus. 

An  increase  in  the  currency  by  Congress  would  only  strain 
our  international  credit  to  a  greater  extent,  hence  we  must 
look  to  the  gold  mine  for  the  real  and  lasting  relief. 

There  is,  however,  no  reasonable  ground  for  the  senseless 
runs  on  banks  by  depositors  and  they  are  the  ones  who  will 
suffer  most  in  the  end  through  such  attacks.  Every  bank 
depositor  should  sustain  the  banks,  withdrawing  their  money 
for  their  legitimate  personal  or  business  needs  only  and 
allowing  it  to  circulate  through  the  banks  for  business  pur- 
poses. 

In  addition  to  the  Westinghouse  Company  there  are  sev- 
eral other  large  copper  using  concerns  which  are  limiting 
their  output  of  copper  products  on  account  of  close  money. 
The  closing  down  of  the  great  Southern  Steel  Company  is 
due  according  to  the  statements  of  its  officials  to  a  failure 
to  secure  money  tq  meet  the  overwhelming  strain  of  business 


11 


thrust  upon  it.  The  real  demand  and  use  for  copper  is  even 
greater  to-day  than  during  the  days  from  1900  to  1907,  when 
the  price  was  forced  up  to  an  artificially  high  figure.  There 
are  hundreds  of  hydro-electric  plants  in  various  sections  of 
the  United  States  which  will  require  millions  of  pounds  of 
copper  to  complete;  there  are  thousands  of  miles  of  projected 
electric  traction  roads  ready  to  use  millions  of  pounds  more 
of  copper  in  their  construction  and  equipment;  there  are 
thousands  of  steam  railways  in  contemplation  of  electrifica- 
tion as  soon  as  money  can  be  provided  to  finance  those  im- 
provements; there  are  hundreds  of  industries  ready  to  utilize 
electric  power,  all  of  which  will  require  hundreds  of  millions 
of  pounds  of  copper.  Let  the  gold  production  of  the  world 
increase  so  as  to  furnish  the  necessary  money  to  make  the 
contemplated  improvements  and  it  would  require  the  capac- 
ity of  a  dozen  Westinghouse  plants  to  turn  out  the  electrical 
equipment.  As  the  sudden  demand  for  copper  in  1900  was 
promptly  met  through  the  general  exploration  for  it,  so  will 
the  sudden  demand  for  more  gold  be  met  through  the  re- 
newed world  wide  exploration  for  gold  mines  which  is  sure 
to  follow  the  collapse  in  copper  metal  prices  and  consequent 
loss  of  confidence  in  copper  shares. 

WHY  IS  GOLD  SCARCE? 

Why  is  there  at  this  time  such  a  world  wide  scarcity  of 
gold?  The  causes  are  numerous.  The  carting  away  to 
Europe  every  Summer  of  $150,000,000  to  $200,000,000  of 
gold  by  tourists  is  a  serious  drain  upon  our  supply.  By  this 
means  Europe  is  able  to  pay  us  in  our  own  coin  for  a  large 
part  of  our  surplus  exports,  which  otherwise  would  come  to 
us  in  new  gold.  The  abnormal  advance  in  the  price  of  cop- 
per enabled  the  producing  copper  companies  to  increase  their 
dividends;  the  public  became  ravenously  hungry  for  all 
kinds  of  copper  properties  and  copper  shares,  prospectors 
and  miners  lost  sight  of  everything  else  and  went  in  search 
of  copper.  Mines  which  had  been  closed  for  years  on  account 
of  depreciation  in  silver  were  re-opened  and  found  to  be 
profitable  copper  mines.  Prospectors,  both  reputable  and 
disreputable,  worked  over  time  day  and  night  to  load  the 
public  with  copper  shares,  of  established  copper  mines  or 
with  freshly  printed  certificates  of  new  properties,  many  of 
which  could  never  be  expected  to  return  anything  to  pur- 


12 


chasers.  In  order  to  make  attractive  the  copper  shares  it 
was  necessary  to  maintain  for  a  time  the  increasing  divi- 
dends and  therefore  the  stock  manipulators  forced  and  main- 
tained fictitious  prices  on  copper,  thereby  restricting  con- 
sumption at  a  time  when  improvements  requiring  copper 
could  have  been  financed,  thus  forcing  a  big  surplus  of  cop- 
per. But  every  structure  reared  on  a  false  foundation  must 
topple  and  crumble  under  the  real  test,  and  the  copper  con- 
spirators had  reckoned  unadvisedly.  They  overlooked  the 
fact  that  credit  overstrained  must  seek  an  equilibrium  in 
commerce  and  trade.  The  enormous  amounts  of  money 
withdrawn  from  trade  to  enter  the  speculations  in  copper 
shares  began  to  be  felt  in  1906,  in  the  industrial  and  finan- 
cial world,  in  the  direction  of  legitimate  business  enterprises 
being  unable  to  sell  bonds  or  securities  at  prices  which  would 
warrant  the  enlargement  and  extension  of  the  enterprise  and 
thereby  provide  a  market  for  the  already  accumulating  sur- 
plus of  copper.  These  conditions  were  not  peculiar  alone 
to  this  country  but  extended  to  all  the  leading  countries 
of  Europe.  The  demand  for  gold  became  so  active  abroad 
that  Europe  in  place  of  paying  its  debit  balance  on  exports, 
which  in  1906  showed  an  excess  of  |517,000,000,  began  to 
sell  its  American  securities  thereby  calling  upon  capital 
which  otherwise  would  have  gone  into  new  enterprises  in 
which  copper  wrould  have  been  provided  with  a  constant  and 
increasing  market  to  be  used  in  the  absorption  of  the  securi- 
ties thrown  upon  us  by  foreign  holders.  The  demand  for 
gold  has  become  world  wide  in  every  line  of  industry,  and 
notwithstanding  the  constantly  increasing  gold  production  it 
was  and  now  is  entirely  inadequate  to  meet  the  requirements 
of  the  far  greater  proportionate  increase  in  business  and 
commerce. 

A  FEW  WOKDS  ON  GOLD  PRODUCTION. 

The  annual  production  of  gold  in  the  United  States  in 
1860  was  $46,000,000.  It  then  began  to  gradually  fall  off 
until  in  1862-3  it  had  declined  to  $39,000,000.  In  1864  it 
again  reached  $46,000,000.  On  account  of  mining  activities 
following  the  war  it  increased  slightly  yearly  until  it  reached 
about  $47,000,000,  and  in  1871  it  had  declined  again  to  $43,- 
000,000.  Between  1871  and  1879  it  again  suffered  declines 


13 


until  it  had  reached  f 33,000,000;  but  in  1877  and  1878  in- 
creased activities  brought  it  up  to  |46,000,000  and  $51,- 
000,000.  In  1879  it  dropped  to  |38,000,000  and  fluctuated 
between  that  figure  and  $30,000,000,  the  average  figure  being 
about  $32,000,000  up  to  1895,  when  it  again  suddenly  rose  to 
$46,000,000.  The  search  for  gold  began  with  the  panic  of 
1892-3  and  the  great  demand  for  gold  resulting  from  the 
panic.  The  effect  of  exploitation  were  soon  felt,  for  in  1896 
the  United  States  production  suddenly  jumped  to  $53,- 
000,000,  the  highest  point  in  the  thirty  years  next  preceding. 
In.  1897  it  rose  to  $57,000,000;  in  1898  to  $64,000,000;  in  1889 
to  $71,000,000;  in  1900  to  $79,000,000. 

Note  the  figures  carefully  and  then  reflect  on  the  real  con- 
ditions. The  lean  period  of  gold  production  immediately 
preceded  the  business  depression  of  1892-3;  and  the  era  of 
unparallelled  prosperity  from  which  we  are  just  experienc- 
ing a  temporary  re-action  followed  quickly  the  sudden  and 
marked  increase  in  gold  production  between  1892  and  1896. 
The  increased  production  has  been  gradual  since  that  time 
but  no  where  nearly  in  proportion  to  the  world  wide  increas- 
ing demand  for  it  to  supply  the  needs  of  our  growing  busi- 
ness. A  million  dollar  increase  in  1895  would  have  required 
$10,000,000  to  $20,000,000  in  1906  to  have  accomplished  the 
same  effect.  The  product  of  the  gold  mine  takes  its  place 
in  the  finances  of  the  world  at  once,  whether  coined  or  un- 
coined, and  while  a  new  copper  mine  would  not  effect  the 
copper  market  for  about  five  years.  A  new  gold  mine  effects 
the  gold  market  at  once. 

Take  now  the  gold  production  of  the  world.  In  1860  it 
was  $134,000,000  and  declined  gradually  to  $115,000,000  in 
1872.  You  can  readily  recall  the  depression  in  1872  follow- 
ing the  steady  decline  in  gold  production.  In  1873-4-5-6  it 
declined  below  $100,000,000.  For  the  next  few  years  it  grad- 
ually increased,  but  in  1883  it  declined  again  to  $95,000,000. 
It  then  rose  at  the  rate  of  about  $5,000,000  a  year  until  1891, 
when  it  had  reached  $130,000,000,  the  highest  point  since 
1860.  The  increase  had  been  gradual  and  steadied  business 
but  the  rapidly  growing  business  required  more  money  to 
meet  the  expansion  of  trade  and  the  depression  began  to  be 
felt  in  1892.  In  1892  the  world's  gold  production  rose  to 
$146,000,000;  in  1893  to  $157,000,000;  in  1894  to  $181,- 


14 


000,000  and  in  1895  to  f  189,000,000;  but  by  examination  of 
the  figures  for  the  United  States  given  above,  it  will  be  seen 
that  the  entire  increase  in  production  was  in  foreign  coun- 
tries, notably  South  Africa  and  we  had  not  yet  begun  to  feel 
the  effects  of  it.  In  1896  the  world's  production  rose  to 
$202,000,000,  about  $15,000,000  of  which  increase  was  in  the 
United  States  and  we  then  first  began  to  feel  the  substantial 
effects  of  the  increased  production.  In  1897  it  rose  to  $236,- 
000,000;  in  1898  to  $286,000,000,  and  in  1899  to  $307,000,- 
000,  and  the  production  has  continued  steady  in  this  country 
since  then.  The  world  wide  era  of  prosperity  which  started 
in  this  country  in  1896,  and  in  Europe  a  few  years  previous, 
has  only  followed  the  periods  of  substantially  increased  pro- 
duction of  gold.  But  while  the  gold  production  was  increas- 
ing at  a  substantial  rate,  the  business  of  the  world  and  the 
demand  for  gold  was  increasing  at  a  far  greater  ratio.  The 
Boer  War  checked  production  for  two  or  three  years  in 
South  Africa;  the  Bussian- Japanese  War  called  for  an  un- 
usual amount  from  a  single  quarter;  Mexico  placed  itself  on 
a  gold  basis;  Egypt,  India  and  China  have  been  absorbing 
annually  more  gold.  The  world's  production  declined  from 
$307,000,000  in  1899  to  $255,000,000  in  1900  and  $263,000,- 
000  in  1901,  whereas  to  have  kept  pace  with  the  growing 
trade  and  business  it  should  have  reached  $360,000,000  in 
1900  and  $400,000,000  in  1901.  In  order  to  have  enabled 
the  world  to  carry  on  the  necessary  and  urgently  needed  im- 
provements then  under  way,  such  as  the  electrification  of 
railroads,  building  of  electric  power  plants,  re-building  and 
equipping  steam  railroads  and  the  building  of  new  lines;  the 
rebuilding  of  destroyed  cities  and  other  properties  caused  by 
war  or  earthquakes  and  the  carrying  on  of  other  needed  im- 
provements, the  world's  gold  production  in  1904,  should  have 
been  at  least  $500,000,000,  but  the  actual  figures  showed  only 
$346,892,000,  being  nearly  $200,000,000  short  of  the  require- 
ments. The  mad  rush  for  copper  which  began  in  1899,  with- 
drew the  prospectors  largely  from  the  search  for  gold  and 
while  increasing  the  copper  production  to  meet  the  growing 
demand  it  was  shutting  off  the  fountain  from  which  must 
come  the  gold  to  enable  the  consumers  of  copper  to  fill  their 
requirements. 

Had  the  production  of  gold  kept  pace  with  the  wonderful 
business  progress  during  the  past  ten  years  the  production 


15 


in  1900  should  have  been  at  least  $700,000,000,  whereas  it 
was  but  slightly  more  than  half  that  amount.  That  I  am 
not  alone,  in  the  belief  that  the  depression  in  prices  of  copper 
metal,  copper  shares  and  in  all  other  securities  as  well  as 
stagnation  of  new  business  enterprises  is  due  to  the  shortage 
in  gold,  I  will  quote  from  a  few  recent  articles : 

The  Financial  World  of  October  19th,  in  an  editorial 
headed  "The  Scarcity  of  Gold"  states  among  other  things: 
"The  underlying  reason  of  the  present  disturbance  in  all  se- 
curity markets  is  the  growing  scarcity  of  gold.  As  great  as 
the  production  of  this  metal  is  at  present,  the  demand  for 
it  is  even  greater.  The  supply  is,  notwithstanding  the  con- 
stant opening  of  new  gold  mines  and  the  exploitation  of  old 
gold  mines  by  modern  machinery,  far  behind  the  demand." 

The  New  York  Sun  of  October  21st,  contains  an  article 
dealing  with  this  same  subject.  Under  the  heading  of 
"Scarce  Money  Hurts  Copper."  "The  copper  trade  is  in  bad 
shape  because  money  is  tight,  not  only  in  the  United  States 
but  in  Europe.  Beginning  with  the  first  flow  of  gold  from 
the  mines  of  the  Band,  South  Africa,  there  has  been  a  tre- 
mendous increase  in  the  production  of  this  metal,  on  which 
rests  the  entire  business  fabric  of  the  world.  In  consequence 
of  this  increase  all  civilized  countries  have  added  greatly  to 
their  holdings  of  gold  and  the  past  ten  years  have  witnessed 
the  period  of  greatest  activity  and  industrial  progress  ever 
known." 

THE  REMEDY. 

The  remedy  for  existing  financial  ills  then  is  a  renewal  of 
activity  in  the  search  for,  exploration  and  working  of  gold 
mines.  This  is  as  certain  to  follow  the  suspension  of  copper 
mining  as  that  day  will  follow  the  night.  The  "Copper  Age" 
which  has  been  with  us  for  the  past  ten  years  will  now  be 
speedily  followed  by  a  new  "Gold  Age"  in  which  all  indus- 
tries will  thrive.  It  has  always  been  proven  that  whenever 
the  prospectors,  miners  and  capitalists  unite  in  pursuing  ex- 
plorations for  the  metals  that  the  joint  efforts  have  been 
realized  and  duly  rewarded.  Gold  is  the  master  of  the  finan- 
cial world;  it  controls  all  business  enterprises.  There  is  a 
limit  to  which  credit  may  extend  and  while  financial  opera- 
tions are  confined  within  that  limit  enterprises  flourish. 
Every  dollar  of  new  gold  will  support  with  confidence  a 


16 


§5.00  expansion  of  credit  currency;  but  once  let  the  limit  be 
passed,  confidence  is  shaken  and  there  conies  like  a  bolt  of 
lightning  from  the  clouds,  a  scramble  for  gold  from  every 
quarter  of  the  globe.  It  is  the  only  money  of  final  settle- 
ment. 

WHAT  IS  NECESSARY. 

To  bring  about  the  ."Gold  Age"  and  with  it  the  "Copper 
Age"  the  "Industrial  Age,"  and  financial  confidence  and  sta- 
bility will  require  much  hardship,  privation  and  suffering 
on  the  part  of  the  prospectors  and  miners,  who  will  risk  their 
lives  in  the  exploration  of  remote  and  dangerous  places.  It 
will  also  mean  the  loss  of  millions  of  dollars  primarily  ex- 
pended in  the  exploration,  development  and  proving  of  un- 
known, but  reasonaby  to  be  believed,  meritorious  properties 
which  may  prove  failures.  It  will  also  mean  the  loss  of  other 
millions  by  innocent  and  deluded  investors  who  will  listen 
to  the  boastings  of  the  unprincipled  and  dishonest  promot- 
ers, who  are  ever  ready  to  take  advantage  of  public  interest 
in  honest  enterprises,  to  gather  in  the  pennies  of  the  poor  but 
honest,  confiding  public.  The  final  outcome  will  however, 
pay  for  all  the  hardships  and  losses,  in  the  increased  pros- 
perity and  better  opportunities  for  the  whole  people  which 
will  follow.  Perhaps  not  every  individual  will  gain  to  the 
extent  of  his  individual  loss,  but  collectively  they  will. 
WHEEE  WILL  THE  GOLD  COME  FROM? 

Where  is  all  of  this  increased  supply  of  new  gold  to  come 
from,  it  may  be  asked?  From  all  parts  of  the  globe.  But- 
some  say  that  the  probable  localities  for  profitable  gold  pro- 
duction haVe  already  been  thoroughly  explored.  This  is  not 
so,  for  every  year  gold  is  found  in  places  where  perhaps  the 
year  before  it  had  been  explored  and  pronounced  a  failure. 
The  gold  veins  and  placer  diggings  of  the  world  have  not  yet 
even  been  properly  scratched.  There  lies  waiting  for  the 
pan  and  pick  of  the  prospector  in  the  states  of  Colorado, 
Idaho,  Montana,  Washington,  Oregon,  California,  New  Mex- 
ico, Arizona  and  Nevada,  more  gold  than  has  ever  been  ex- 
tracted. Science  and  invention  are  yearly  providing  im- 
proved methods  of  saving  gold  from  ores  which  were  con- 
sidered worthless  the  year  before.  Prospectors  and  miners 
are  studying  mining  as  a  science  more  each  year.  The  gov- 
ernment is  coming  to  the  aid  of  the  prospectors  through 
geological  research. 


17 


GOVEKNMENT  AID. 

The  day  is  not  far  distant  when  this  government  will 
establish  and  maintain  free  assay  and  experimental  treat- 
ment plants  in  every  mining  State  where  the  poor  hard 
working  prospector  can  at  no  expense  have  the  various  sam- 
ples he  encounters  in  his  prospecting  carefully  and  compe- 
tently analyzed  by  employees  of  the  government  and  not  be 
compelled  as  is  often  the  case,  to  part  with  half  of  his  dis- 
covery to  secure  an  assay.  Not  until  the  government  estab- 
lishes such  offices  and  gives  to  mining  the  same  considera- 
tion that  it  does  to  farming  and  some  other  industries,  will 
there  be  that  thorough  and  successful  prospecting  which  will 
fully  develop  the  gold  resources  of  this  country.  With  this 
encouragement  by  the  government  the  prospector  will  feel 
assured  that  he  will  be  encouraged  and  protected  in  his 
work;  that  he  can  have  the  value  of  his  discoveries  fully 
tested,  both  as  to  value  and  methods  of  treatment;  this  will 
place  him  on  the  equality  with  what  only  the  capitalist  can 
do  now,  hence  the  prospector  will  then  enjoy  at  least  the 
major  portion  of  his  hard  labors.  This  government  aid  will 
have  also  another  far  reaching  and  beneficial  effect.  The 
approval  of  the  government  officials  as  to  the  value  and 
methods  of  treatment  of  the  ores  of  a  prospective  mine  will 
strengthen  the  confidence  of  prospective  investors  in  mines, 
and  thereby  aid  in  the  furnishing  of  capital  to  open  up  and 
prove  the  discoveries  of  prospectors.  With  government  aid 
to  prospectors  investors  would  soon  learn  to  insist  upon  a 
certificate  from  a  government  Mine  Commissioner  before  In- 
vesting in  a  mining  enterprise.  This  would  eliminate  many 
of  the  wild  cat  mining  propositions  which  are  the  curse  of 
the  industry  and  would  elevate  mining  to  the  position  it 
should  occupy  in  the  business  world.  The  actual  prospec- 
tor or  discoverer  of  a  mine  would  then  reap  his  reward,  and 
prospecting  for  gold  would  be  greatly  stimulated  to  the 
general  good  of  all 

The  neglect  of  the  government  to  extend  proper  encourage- 
ment to  mining  by  enabling  the  prospectors  to  learn  scien- 
tific prospecting,  and  to  have  free  analysis  and  tests  made 
of  samples  which  would  indicate  the  presence  of  gold,  has 
confined  the  search  for  gold  largely  to  what  may  be  termed 
"freak  ores"  that  is  ores  in  which  the  prospector  could  see 
the  gold.  The  low  grade  gold  mines  of  the  world  are  the 


18 

most  profitable  and  prolific  in  the  long  run;  they  are  prac- 
tically manufacturing  propositions  and  the  prospecting  for 
such  should  be  encouraged  by  the  government  in  every  way 
possible. 

GOLD  MINING  A  MANUFACTURING  BUSINESS. 

There  will  undoubtedly  be  many  new  and  low  grade  gold 
mines  opened  up  and  successfully  worked  during  the  next 
few  years.  Alaska  has  known  deposits  of  lowr  grade  profita- 
ble gold  ores,  which  are  now  in  need  of  capital  and  which 
are  as  safe  to  invest  in  as  any  established  manufacturing 
business  and  a  great  deal  more  profitable.  Colorado,  New 
Mexico,  Montana,  Nevada,  Idaho,  Washington,  Oregon,  Cal- 
ifornia and  Arizona  all  show  evidence  of  substantial  bodies 
of  low  grade  profitable  gold  ores,  waiting  only  for  the  pros- 
pector to  prove  them  before  capital  in  sufficient  amount  will 
take  hold  of  them.  In  mining  the  small  investor  and  pros- 
pector must  usually  take  the  first  risk,  and  not  until  it  is 
proven  will  capital  take  hold  of  it.  Whenever  the  large 
and  known  gold  deposits  of  Alaska  are  opened  up  they  will 
add  millions  annually  to  our  gold  supply.  In  addition  to 
these,  exploration  will  bring  to  view  many  other  such  de- 
posits in  Alaska.  As  an  illustration  of  low  grade  gold  mines 
take  the  Alaska  Treadmill  mine;  reports  show  that  this 
mine  has  crushed  4,624,289  tons  of  ore  which  yielded  $11,- 
144,912.24.  The  average  yield  per  ton  being  only  |2.41  and 
the  average  cost  of  operation  being  $1.18  per  ton.  The  net 
profits  are  shown  to  be  $5,667,149.58  and  the  Company  has 
on  this  very  low  grade  ore  been  paying  large  dividends.  The 
Company  have  in  use  only  about  500  stamps.  The  Alaska 
Mexican  Mine  shows  even  a  more  astonishing  fact  regard- 
ing low  grade  ores.  It  crushed  1,293,662  tons  of  ore  yield- 
ing $2,816,278.83  in  gold,  or  an  average  of  only  $2.18  per 
ton.  The  operating  expense  was  $1.73  per  ton  thus  showing 
a  net  profit  of  only  45c  per  ton,  and  yet  the  company  has 
been  able  to  return  to  its  stockholders  profits  of  nearly 
$600,000.  The  Ready  Bullion  Mine  in  same  locality  has  pro- 
duced over  $3,000,000.  The  entire  stamp  capacity  of  the 
Alaska  Mines  at  present  would  only  approximate  1,000 
stamps  whereas  there  should  be  in  operation  in  that  section 
several  times  that  number. 

The  Mining  and  Scientific  Press  of  October  5th,  1907,  con- 


19 


tains  an  article  on  the  mines  of  South  Africa  in  which  it 
states:  "The  greatest  gold  mine  in  the  world  is  said  to  be 
the  Kobinson  Mine.  This  mine  started  operations  in  1888, 
since  which  time  it  has  milled  $2,686,315  tons  of  ore.  The 
gold  produced  has  been  approximately  f  47,000,000,  with  divi- 
dends of  about  $25,000,000  or  over  $2,500,000  per  year.  The 
ore  actually  in  sight  is  said  to  be  over  4,000,000  tons  with  a 
net  value  of  over  $40,000,000.  These  facts  are  sufficiently 
eloquent  and  emphasize  the  wonderful  possibilities  of  gold 
mining." 

There  are  in  operation  in  the  South  African  mining  coun- 
try over  8,000  stamps.  What  will  be  the  result  when  the 
mines  of  Alaska  are  equipped  to  that  extent?  Add  to  this 
the  mills  that  could  be  profitably  employed  in  milling  the 
gold  ore  of  other  well  known  mining  sections  of  the  world 
and  you  can  in  a  measure  realize  what  the  production  of 
gold  will  be,  and  its  effect  on  the  business  of  the  world. 

There  are  many  sections  where  gold  mining  can  be  profit- 
ably looked  into  and  capital  invested  in  at  the  present  time. 
Mexico  is  rich  in  gold  ores  but  little  effort  has  yet  been 
made  to  utilize  them.  Peru,  Guiana,  Brazil,  Argentina,  Co- 
lumbia and  other  South  American  countries  are  filled  with 
gold  mining  possibilities  waiting  only  the  magic  wand  of 
capital  and  enterprise  to  yield  up  untold  millions  annually. 
In  the  Central  American  States  gold  is  known  to  exist  in 
almost  unlimited  quantities.  In  Costa  Rica  and  Nicaragua 
there  are  many  old  Spanish  mines  which  by  the  most  crude 
and  unscientific  methods  yielded  millions  of  dollars  nearly 
a  century  ago  from  surface  workings  alone.  These  mines 
were  worked  by  open  cuts  made  into  the  huge  dykes  or  veins 
of  gold  ore,  and  the  treatment  was  by  old  Spanish  Arastas 
saving  perhaps  30%  to  50%  of  the  gold.  These  mines  laid 
idle  for  years  and  within  only  the  past  few  years  several  of 
them  have  been  taken  hold  of  by  American  and  English  capi- 
tal with  success  in  nearly  every  instance.  The  ores  are  said 
to  be  principally  of  gold,  and  yield  freely^  to  the  ordinary 
milling  and  cyanide  process.  It  is  claimed  that  many  old 
mines  in  Central  America  were  opened  by  shallow  tunnel 
workings  at  a  later  date  and  the  rich  streaks  which  would 
pay  with  an  arastra  worked,  and  much  larger  amounts  of 
what  was  then  considered  unprofitable  ore  left  exposed  in 
the  workings.  It  is  claimed  that  with  a  moderate  systematic 


development  very  large  bodies  of  ore  could  be  blocked  out 
in  some  of  those  old  properties  at  a  reasonable  expense  and 
that  with  a  modern  plant  could  be  made  to  pay  substantial 
interest  returns  upon  large  capital.  The  ores  of  some  of  the 
Costa  Eica  Mines  which  have  already  been  equipped  show 
high  milling  values,  while  some  of  the  properties  which  have 
been  examined  show  probable  average  gold  values  of  f  10.00 
per  ton  and  upward.  With  the  low  cost  of  mining  that 
usually  prevails  in  the  Spanish  American  countries  and  the 
free  milling  character  of  the  ores,  even  $5.00  ore  should  yield 
a  substantial  profit  with  a  plant  of  reasonable  capacity. 
New  properties  in  the  South  American  and  Central  Ameri- 
can States  are  already  in  process  of  being  equipped  both  in 
placer,  dredging  and  lode  mining  and  from  present  indica- 
tions they  should  before  many  years  attract  sufficient  Amer- 
ican capital  to  bring  those  countries  into  rank  with  Alaska 
or  even  South  Africa. 

The  geologist  used  to  say  that  you  would  find  gold  only 
in  certain  rock  formations,  but  the  venturesome  and  much 
abused  prospector,  aided  by  the  practical  miner  with  courage 
to  test  his  belief,  have  proven  that  "Gold  is  where  you  find 
it,"  and  they  are  finding  it  in  almost  all  kinds  of  formations. 

If  a  small  portion  only  of  the  money  which  has  gone  into 
copper  mines  in  the  past  eight  years  had  been  expended  in 
the  legitimate  exploration  and  development  of  gold  proper- 
ties the  production  would  have  been  greatly  augmented. 
This  has  been  proven  in  Nevada,  but  there  the  search  for 
gold  has  been  largely  confined  to  the  "freak  ores"  instead  of 
the  more  stable  and  enduring  gold  manufacturing  proposi- 
tions. The  "freak  mines"  unduly  excite  and  enthuse  the 
public  and  lead  to  the  reckless  and  speculative  promotion  in 
mining  stocks  rather  than  legitimate  mining  enterprises. 

A  WORD  OF  CAUTION. 
WHAT  CONSTITUTES  A  GOLD  MINE. 

In  concluding  this  article  it  may  not  be  out  of  place  to 
add  a  few  words  of  warning  to  the  thousands  of  persons  who 
will  be  importuned  to  invest  in  mining  stocks  during  the 
coming  "Gold  Age." 

All  stocks  bearing  the  name  of  or  printed  in  gold  cannot 
be  classified,  as  desirable  or  legitimate  gold  shares. 

There  must  be  a  substantial  foundation,  and  it  is  well 
enough  here  to  define  what  constitutes  such  a  gold  mine 


21 


as  would  be  considered  a  safe  and  sound  investment.  In  a 
work  on  mining  by  B.  H.  Stretch,  E.  M.,  under  the  heading 
of  what  constitutes  a  mine  it  is  stated  "A  mere  bunch  of  ore 
will  not  make  a  mine;  and  it  may  be  well  to  examine  the 
factors  which  really  go  to  constitute  a  mine.  A  "MINE" 
then,  is  any  deposit  of  mineral  which  can  be  worked  at' a 
profit;  before  the  deposit  is  exhausted  it  must  have  returned 
to  the  "adventurers"  (or  shareholders)  the  original  pur- 
chase money,  the  entire  cost  of  improvements  of  every  na- 
ture, and  the  entire  cost  of  working  the  ore,  whether  it  be 
mining,  milling,  smelting,  transportation,  supplies,  superin- 
tendence, or  office  expenses,  together  with  a  fair  interest  on 
the  money  invested." 

(1)  This  means  a  property  of  merit,  and  if  a  gold  mine, 
carrying  gold  ores  in  quantity  and  paying  quality.  (2)  It 
should  be  developed  sufficiently  to  prove  the  first  condition 
and  warrant  its  equipment  with  a  suitable  plant;  (3)  It 
should  have  favorable  conditions  for  working  and  the  results 
should  show  profits;  (4)  the  amount  of  ore  in  sight  or  read- 
ily ascertainable  should  be  sufficient  to  repay  all  costs  of 
equipment,  operation,  and  still  return  to  investors  their 
principal  in  a  given  number  of  years  with  a  fair  interest 
return  in  addition,  provided  no  more  ore  is  discovered. 
These  conditions  existing  on  the  start  investors  are  not  spec- 
ulating or  risking  their  money,  for  they  are  assured  in  ad- 
vance of  receiving  their  money  back  with  interest,  and  when- 
ever a  person  does  that  he  cannot  complain.  Mining  is  now 
so  well  understood  by  experienced  engineers  and  miners 
that  the  foregoing  points  can  be  established  to  a  practical 
certainty  before  beginning  the  erection  of  a  plant. 

The  only  speculative  feature  about  such  an  investment  is 
whether  the  investor  will  receive  10%  a  year,  which  is  re- 
garded as  a  fair  return  in  addition  to  his  principal,  in  a 
mining  investment;  or  whether  through  new  ore  bodies  to 
be  opened  up  as  part  of  the  mining  expenses  he  may  not 
receive  20^-,  30^  or  even  more  per  year.  The  development 
work  should  always  be  kept  ahead  of  the  extraction  and  this 
work  is  usually  charged  as  part  of  the  operating  expense 
but  really  becomes  a  surplus  same  as  the  earnings  of  any 
other  business  above  dividend  requirements  is  considered. 
A  good  mine  may  be  operated  in  a  poor  manner,  and  it  is 
all  important  that  the  management,  should  be  in  the  hands 


22 


of  successful  and  competent  business  men,  whose  honesty 
and  integrity  cannot  be  questioned.  (5)  Therefore  it  is  all 
important  for  the  investor  to  look  carefully  into  the  char- 
acter, ability  and  reputation  of  the  men  who  constitute  the 
business  management  of  the  Company,  if  the  men  are  clean 
and  successful  you  can  rely  largely  upon  their  statements 
regarding  the  mine  .  (6)  The  verification  of  the  facts  con- 
stituting the  essentials  of  a  mine  must  rest  largely  upon  the 
report  of  the  engineer  who  examines  and  reports  upon  the 
property,  therefore  inquire  into  the  record  of  the  engineer 
and  learn  whether  his  previous  experience  has  been  asso- 
ciated with  successes  or  failures. 

When  the  foregoing  conditions  are  found  to  exist  no  one 
need  hesitate  to  invest  in  the  property  or  the  shares,  and 
if  he  becomes  interested  in  the  first  stages  of  the  financing 
of  the  enterprise,  when  the  shares  are  usually  sold  at  a  low 
price  comparatively,  he  is  sure  to  reap  very  large  profits  from 
the  enterprise,  and  have  a  long  time  profitable  investment. 

If  the  foregoing  conditions  do  not  exist  then  it  becomes 
largely  a  speculation  instead  of  an  investment,  as  it  is  then 
a  development  proposition.  However,  it  often  happens  that 
a  development  proposition  becomes  very  profitable,  but  it 
should  be  more  carefully  scrutinized  before  investing  in  it, 
and  no  one  should  invest  in  a  developing  proposition  unless 
he  can  afford  to  lose  his  money.  The  points  to  be  observed 
in  a  development  proposition  are  briefly  as  follows:  (1)  Is 
the  property  one  of  prospective  merit  and  well  located  as 
to  proven  mines,  or  reasonably  favorable  for  mineral  from 
surface  showing,  formation  and  general  location?  (2)  Is 
the  title  good?  (3)  Is  the  Company  properly  organized  and 
does  it  hold  title?  (4)  Are  you  securing  your  stock  at  a 
price  which  is  justified  by  the  prospective  value  of  the  prop- 
erty compared  with  capitalization?  (5)  Is  the  management 
honest  and  competent  and  does  the  money  received  from  sale 
of  shares  go  into  the  development  of  your  property?  These 
conditions  being  favorable  you  have  no  complaint  to  make 
if  the  proposition  should  fail,  for  you  have  taken  a  specu- 
lative chance  at  long  odds  and  if  one  out  of  ten  wins  you  may 
come  out  ahead. 

Mining  is  one  of  the  most  laudable  of  all  business.  What 
the  miner  takes  from  the  mine  robs  none  but  mother  earth 
and  goes  forth  to  enrich  and  enoble  all  who  use  it  rightly. 


23 

GOLD  MINING  LEADS. 

Gold  mining  stands  at  the  head  of  all  other  mining  enter- 
prises. You  have  no  competition  and  the  price  of  your  pro- 
duct is  always  the  same.  Your  dividend  returns  depend  only 
upon  two  points,  production  and  management,  while  in  cop- 
per mining  you  are  always  at  the  mercy  of  the  market  the 
difference  of  Ic  a  pound  in  price  of  copper  may  mean  a  differ- 
ence of  considerable  in  your  dividends  or  may  cut  them  off 
entirely.  The  price  of  copper  can  be  manipulated  as  has 
been  done,  and  your  stock  values  ruined  in  a  few  days  even 
though  your  mine  has  an  abundant  supply  of  ore. 
THE  FUTURE  OF  COPPEE. 

The  Gold  Age  is  coming  soon  and  the  capitalist  or  small 
investor  who  will  invest  in  gold  properties  or  gold  shares  of 
merit,  with  due  caution  and  discretion  is  going  to  reap  large 
returns.  With  the  coming  of  the  Gold  Age  will  return  re- 
newed and  increasing  demand  for  copper  at  a  stable  price 
probably  between  12c  and  15c  and  the  copper  shares  of  favor- 
able copper  mines  will  return  fair  interest  to  those  who  have 
purchased  them  at  proper  prices.  Hold  on  to  your  copper 
stocks  at  present. 

HAVE  YOU  LOST  MONEY? 
WOULD  YOU  REGAIN  IT? 

In  conclusion  a  word  to  those  who  have  invested  and  lost. 
In  the  majority  of  cases  it  is  your  own  fault.  You  have  been 
led  into  it  by  false  and  unreasonable  promises  that  a  little 
investigation  would  have  shown  you  could  not  be  carried 
out?  It  is  much  better  to  spend  a  few  cents  or  even  a  few 
dollars  in  investigation  rather  than  lose  a  hundred  or  a 
thousand.  Fully  nine-tenths  of  all  the  mining  stocks  sold 
are  promoted  by  persons  who  have  absolutely  no  knowledge 
of  a  mine.  They  know  what  it  costs  to  print  stock  certifi- 
cates and  sell  stock,  and  figure  that  all  above  that  is  profit. 
One  of  these  persons  comes  into  your  town,  perhaps,  and 
tells  about  owning  ten  or  twenty  mining  claims  in  some 
established  mining  district,  which  is  then  having  a  boom. 
It  is  the  power  that  moves  the  business  world  and  advances 
the  civilization  of  every  nation. 

He  gets  a  few  business  men  to  put  in  a  few  dollars,  organize 
a  company  and  become  directors,  and  then  the  stock-selling 

241425 


24 


begins.  None  of  them  know  anything  about  a  mine  and  the 
chances  are  that  the  claims  are  situated  miles  from  any  even 
prospective  mining  properties,  and  that  a  competent  mining 
man  would  never  pay  for  recording  the  location  notices  for 
a  deed  of  the  whole  ground.  You  wonder  why  your  money 
is  lost  and  you  condemn  mining.  That  is  not  mining  at  all. 
If  you  have  lost  money  in  such  honestly  intended  proposi- 
tions you  can  soon  make  it  back  in  a  legitimate  mine.  Other 
times  you  read  a  full  page  advertisement  in  a  newspaper 
explaining  about  some  wonderfully  rich  mine  and  you  send 
your  money  to  the  promoters,  who  have  probably  been  writ- 
ten up  in  the  same  newspaper  several  times  as  nothing  more 
or  less  than  unprincipled  swindlers.  In  such  cases  it  be- 
comes you  to  preserve  copies  of  all  advertising  matter, 
whether  newspaper  advertisements,  prospectus,  letters  or 
otherwise  received  from  that  concern  and  submit  them  to 
some  one  familiar  with  mining  and  law  and  it  frequently 
happens  that  your  money  can  be  recovered  back  for  you  if 
the  parties  are  still  in  business.  The  mining  fakirs  who  have 
been  robbing  you  for  years,  and  perhaps  creating  in  your 
mind  an  impression  that  all  mines  are  swindles,  are  well 
known,  and  it  is  easy  for  you  to  learn  their  record  if  you 
will  only  inquire. 

Be  conservative  and  careful  in  making  investments.  Even 
the  most  careful  will  sometimes  meet  with  a  loss,  but  do 
not  let  this  prejudice  you  against  that  particular  form  of 
investment.  This  does  not  mean  that  you  should  follow 
losing  investments  with  recklessness  but  rather  with  more 
than  ordinary  caution.  The  information  given  hereinbefore 
will  enable  anyone  to  form  a  good  idea  of  the  merits  of  a 
mining  proposition.  If  not  sufficient  then  look  carefully  into 
the  reputation  of  the  men  for  you  must  rely  upon  them 
almost  entirely. 

Do  not  sacrifice  your  copper  stocks,  but  look  into  the 
merits  of  the  properties  upon  which  they  are  founded  and 
ascertain  whether  that  mine  can  produce  copper  to  compete 
profitably  with  other  mines  at  the  new  level  of  price  which 
will  maintain  under  natural  conditions  in  the  future.  Do 
not  base  your  profits  upon  manipulated  prices,  for  such  can- 
not be  sustained  except  at  eventual  loss. 

Be  conservative;  but  not  pessimistic. 

Be  courageous;  but  not  reckless. 


Dear  Sir: 

I  am  enclosing  you  as  per  your  request  copy  of  my  booklet 
"  The  Future  of  Copper  "  and  trust  you  will  find  it  of  interest  and 
value.  I  shall  always  be  pleased  to  give  you  any  further  informa- 
tion, and  co-operate  with  you  in  any  way  that  will  tend  to  your 
advantage. 

On  the  question  of  increase  of  our  currency  circulation  as 
suggested  by  Senator  Elkins,  it  has  frequently  occurred  to  me  that 
if  every  holder  of  United  States  Bonds  were  allowed  to  deposit 
the  same  with  the  Secretary  of  the  Treasury  for  periods  of  not 
exceeding  six  months,  and  receive  therefor  Treasury  notes,  or  legal 
tender  notes  for  the  full  par  value  of  the  bonds,  with  the  provision 
that  he  should  forfeit  the  interest  on  the  bonds  during  the  time 
they  remained  in  the  Treasury,  it  would  furnish  a  means  for  sup- 
plying currency  to  move  the  fall  crops.  This  would  also  tend  to 
regulate  interest  rates,  and  would  therefore  adjust  the  currency  to 
the  public  needs  in  place  of  to  the  desires  of  the  bankers.  The 
government  could  set  aside  the  interest  savings  on  the  bonds  to 
provide  for  the  final  payment  of  them.  By  limiting  the  period  in 
which  bonds  could  be  so  deposited  to  six  months  it  would  prevent 
a  permanent  expansion  of  the  currency,  as  depositors  would  redeem 
the  bonds  when  interest  rates  declined  after  the  fall  demand  for 
currency. 

The  foregoing  is  a  suggestion  which  I  should  like  to  see 
discussed. 

Respectfully, 

JOHN  J.  GUSHING. 


UNIVERSITY  OF  CALIFORNIA  AT  LOS  ANGELES 

THE  UNIVERSITY  LIBRARY 
This  book  is  DUE  on  the  last  date  stamped  below 


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